Pakistan Oil & Gas Profit Declines on Higher Tax

Oil & Gas Development Co., Pakistan’s biggest energy explorer, reported a 9.4 percent decline in fiscal second-quarter profit after it paid more tax.

Net income in the three months ended Dec. 31 fell to 14.9 billion rupees ($174.5 million), or 3.46 rupees a share, from 16.4 billion rupees, or 3.82 rupees, a year earlier, the Islamabad-based company said in a statement to the stock exchange today. Sales rose to 41.6 billion rupees from 40.8 billion rupees.

“The net profit was below our expectations because they paid more in tax,” Umer Bin Ayaz, research analyst at JS Global Capital Ltd. in Karachi, said after the announcement. “It was a surprise that they didn’t pay out a cash dividend.”

Demand for energy in Pakistan is three times supply, according to government estimates. The shortage is being driven depleting resources of the country’s fields, prompting the government has increased gas prices to encourage exploration and help meet demand.

Oil & Gas shares fell 0.1 percent to 156.50 rupees at 1:45 p.m. local time on the Karachi Stock Exchange. The share has fallen 8.4 percent this year.

The company’s crude production “contracted 2.6 percent because of depleting oilfields sources like the one called Dodak, in the south, which contributes 14 percent of the company’s total production,” Shahbaz Ashraf, a research analyst with Arif Habib Ltd., who has a “sell” recommendation on the stock, wrote in a report to clients on Feb. 22.

The government, which owns a majority stake in Oil & Gas, plans to raise as much as $1 billion by selling convertible bonds internationally to help bridge a widening deficit, Privatization Minister Naveed Qamar said in an interview yesterday.

Prices for oil and gas in Pakistan rose 12 percent and 22 percent, respectively, from the previous year because of rising global prices, Ashraf said.

Crude rose from the highest close in more than two years as Libya’s violent uprising threatened to disrupt exports from Africa’s third-biggest supplier and spread to other crude-producing nations in the Middle East.

Crude for April delivery gained as much as 66 cents to $96.08 a barrel in electronic trading on the New York Mercantile Exchange and was at $95.86 at 1:31 p.m. Sydney time yesterday. Yesterday, it increased $5.71 to $95.42, the highest since October 2008. Futures are up 21 percent from a year ago.

(Corrects earnings per share in second paragraph.)
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